Over the course of the last decade, the world has undergone a fundamental shift from a paradigm of energy scarcity to abundance. That’s the message from a group of Deloitte experts in the energy industry speaking at a luncheon during the two-day Deloitte Energy Industry Leadership conference.
Utilities are cautious about putting their eggs in the volatile natural gas basket but “all utilities are thinking the same thing,” said John McCue, vice chairman and U.S. Energy & Resources leader. With the U.S. Environmental Protection Agency placing ever more stringent limitations on coal-fired power facilities and the high cost of new nuclear build, “their options are relatively limited,” he said. Natural gas, he intimated, is the future.
John England, vice chairman and leader of Deloitte’s Oil and Gas Practice reiterated McCue’s point, noting that recent studies have revealed even more unconventional shale gas resources in the United States than previously thought. The two real threats to natural gas as the long-term leading fuel in energy production is the potential for a serious environmental issue—to avoid such a disaster natural gas producers need to “be very transparent about what the industry’s doing,” he said—and the shortage of talent in the oil and gas industry.
Despite the abundance of natural gas resources, power producers are under pressure from increasing costs and decreasing demand, but cheap natural gas is not a long-term solution to keeping power operating costs down, McCue said. There’s no way around the fundamental price volatility of natural gas, he said. “Natural gas prices eventually will go up.” The best solution, McCue said, was to focus on finding ways to increase demand through things like manufacturing systems changes and desalinization plants.
Read more natural gas news